Joint accounts and operation of clients’ own accounts

The new SRA Accounts Rules expect you to do more to monitor activity on bank accounts that you operate jointly with a third party or operate on behalf of a client.

Under the new rules, for joint account and accounts operated on behalf of client, it is a requirement to obtain a bank statement for the account at least every five weeks and, for any accounts operated on behalf of clients, the account must be reconciled at least every five weeks.

The SRA has accepted that obtaining statements can cause problems where old bank or building society accounts have been set up prior to these new rules if these old accounts do not provide frequent statements. Therefore the attached updated guidance has been issued this week.

If you are operating a joint account with the client, you should be able to obtain a five-weekly statement of the balance of the account even if this will be the same figure most months of the year. This could be requested from the bank or printed off using online banking facilities.

If five weekly statements are not available, then this is likely to be a breach of the SRA

Accounts Rules. The guidance provides: “You should bear in mind that a client's money should not be kept in a joint account that does not cater for the provision of the relevant statements. Depending on how the joint account is operated, you should take steps to make sure that you have access to the original or duplicate statements.”

You should therefore look at other options and accounts open to the client.

If moving the money would involve a loss to the client, you may be able to apply for a waiver. Guidance on waiver applications is attached.

If you are operating a client's own account and are unable to obtain statements, according to the new guidance, the SRA would expect you to be satisfied that the client's money is not at risk and to record the position – for this you should keep a:

1. central register of the client own accounts that you operate,
2. separate record of the transactions carried out by you or on your behalf in respect of the client's own account, and
3. record of the bills and other notification of costs relating to that client's matter.

For firms that reconcile their bank accounts monthly, it will be simpler to ensure that monthly statements are obtained rather than working on a five week basis.

Please do read the following guidance notes if they apply to you and contact us if you would like to discuss the rules further.

SRA guidance on operating a client's own account

SRA guidance on joint accounts and record keeping

SRA guidance on granting waivers